Navigating the Journey: How Hospitals Can Transition From Providing Care to Managing Health


Among all hospitals, physicians and provider organizations, there is one resonating goal right now: "making the health system work better for everyone," said Miles Snowden, MD, CMO of Optum.

In a Sept. 10 webinar, Dr. Snowden explained that providers are trying to improve their structures through the flow of information, intelligent data analytics and aligned priorities, but it's not always an easy journey. In fact, going from where the system is now — providing care to sick people — to a system that proactively manages the health of a population is the very sticking point for many providers.

He said with the right mindset and tools, providers can "navigate" this journey successfully. Of course, massive changes will have to be made along the way.

Generate new capital

The first part of transitioning to population health management is finding ways to generate capital to support reinvestments in capabilities that improve clinical performance and enable population health management , Dr. Snowden said. There are five main areas where hospital and physician organizations can find new sources of money.

•    Patient access. This involves hospitals enhancing patient flow and increasing the efficiency and productivity of scheduling, registration, bill payment and other general administrative areas.

•    Clinical care. High-acuity areas like the emergency department and operating room are the first places providers should look to simplify the workflow and take costs out of the system, Dr. Snowden said.

•    Medical necessity. Recovery auditors, also known as RACs, as well as other payer auditors have made it a mission to ensure all payments to hospitals are medically necessary and delivered in the right setting. Although hospitals may view these processes as burdensome, it's in their best interest to "proactively address these payer compliances," Dr. Snowden said.

•    Coding and documentation. Organizations that automate and optimize their coding will not only reduce their auditing load, but also increase their charge capture. This is especially important considering ICD-10 is only one year away from going live.

•    Reimbursement. Augmenting cash flow through other revenue cycle management strategies is one of the most common financial strategies for providers today.

"These five core operational areas have been the most fruitful to date for our clients who are looking to find new opportunities," Dr. Snowden said. He cited several health systems that have found millions in savings. For example, the University of Maryland Medical System, an 11-hospital system based in Baltimore, increased its cash collections by $155 million in the first year by ensuring more accurate and efficient coding through its partnership with Optum.

Prepare for change

Once organizations are able to identify areas of savings and new revenue streams, they must redesign their care delivery model, Dr. Snowden said. This means there must be agreement, accountability and alignment to the new goals of healthcare reform, such as value-based payment and taking care of patients in the most efficient sites. Not surprisingly, the goals are also central to accountable care organizations, which are seen as the vanguards of changing the healthcare delivery system.

More providers are entering into the advanced stages of accountable care strategies — a poll of webinar attendees found that one-third to one-half are involved with population health management, health information exchange or predictive analytics. "As a whole, [healthcare] is much more involved and engaged today than as little as two years ago," Dr. Snowden said.

Invest new capital

Based on the 2012 medical claims among 5.5 million commercially insured patients, Optum found that 69 percent of the healthcare costs came from chronic illnesses like diabetes and cardiovascular conditions, and 60 percent of costs occurred in the ambulatory setting. "The point of this…is to bring a statistical validation that a population's medical costs are largely from the treatment of chronic conditions in the ambulatory setting," Dr. Snowden said.

This is where the monies generated from the beginning of the "journey" must be reinvested, he added. Value-based contracting favors providers who do well in managing chronic diseases in low-cost settings, and in particular, there are four steps to achieve success.

•    Optimize network management. Organizations must have physicians who use the low-cost, high-quality subspecialists to build a high-functioning network.

•    Manage care transitions. Hospitals and physicians need to focus on making seamless transitions from the inpatient setting to outpatient and ambulatory settings because a bad handoff could potentially lead to poor outcomes and higher costs.

•    Invest in in-home intervention. A patient's home is the lowest-cost site of care, and the healthcare providers who are most successful under value-based models recognize this.

•    Expand chronic disease management. Hospitals and physicians must use data and analytics to find the "sickest 1 percent" of patients and use care manager outreach strategies to bring them into the office setting when appropriate, Dr. Snowden said.

"If you do nothing but these four things, you can be successful in value-based contracting," he said.

Download the webinar presentation by clicking here.

Note: View archived webinars by clicking here.

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